Court File and Parties
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Intermarket Cam Limited Applicant/Responding Party
AND:
Ursula Weiss, Hans Weiss and Fritz Kammerer Respondents/Moving Parties
BEFORE: Mr. Justice Chalmers
COUNSEL: L. Brusven and J. C. Mastrangelo, for the Applicant/Responding Party
J. Minnes, for the Respondents/Moving Parties
HEARD: August 26, 2020, by videoconference
ENDORSEMENT
OVERVIEW
1On July 19, 2017, Intermarket Cam Limited (“Intermarket”) entered into an Agreement of Purchase and Sale (the “Weiss Agreement”) with Ursula Weiss, Hans Weiss and Fritz Kammerer (collectively referred to as “Weiss”), for the purchase of the property located at 105 Middle Block Road, Cambridge, (the “Weiss Property”). The closing date was November 21, 2019.
2The purchase price was calculated at $123,420 per acre of the net area of the property. The net area is the part of the property that is developable for mixed use such as commercial, industrial and residential. The net area does not include flood plains, wetlands, or other areas identified by the Conservation Authority or other governmental agencies. The Weiss Agreement provides that the purchase price shall be adjusted upwards or downwards based on the actual acres of net area.
3On October 11, 2019, Weiss delivered a survey sketch that identified the net area of the Weiss Property at 156.07 acres. Intermarket objected to the survey sketch because it included non-developmental lands. Intermarket provided correspondence from the Grand River Conservation Authority which set out the area of developable land at 131.36 acres.
4On August 19, 2019, Intermarket entered into an agreement with HOOPP Realty Inc. (HOOPP”) to sell the Weiss Property along with the lands neighbouring the Weiss Property which were known as the Vasiga Property (the “HOOPP Agreement”). The purchase price for the Weiss and Vasiga Properties was fixed and not dependent upon the calculation of the purchase price set out in the Weiss Agreement. The HOOPP Agreement permits HOOPP to assign the agreement to a HOOPP affiliate. The closing date was November 21, 2019.
5On November 19, 2019, Intermarket and HOOPP entered into an amending agreement (the “HOOPP Amending Agreement”). According to Intermarket, the HOOP Amending Agreement was required, in part, because of the unresolved dispute between Weiss and Intermarket with respect to the net area and purchase price. Article 21 in the HOOPP Amending Agreement provides that Intermarket preserves its right to bring an action against Weiss. Article 21 states as follows:
… as long as the Vendor [Intermarket] has satisfied its indemnification obligations pursuant to this Section, the Vendor [Intermarket] shall have the right, at its sole expense, to take all steps and actions (including but not limited to bringing any claims, counterclaims and/or third party claims) whether in the name of or on behalf of the Purchaser [HOOPP] or otherwise as the Vendor [Intermarket] may determine are necessary or desirable to determine and/or resolve any matter or thing arising out of the North [Weiss] Property Purchase Agreement or otherwise (whether before or after Closing), to mitigate any damages and/or to otherwise address any matter or thing involving the North Property Vendor [Intermarket] and/or the North [Weiss] Property Purchase Agreement.
6The HOOPP Amending Agreement also provides that HOOPP intends to assign its interest in the Weiss Property to its wholly owned subsidiary, IPort Cambridge GP Inc. (“IPort”). Article 2 provides that IPort is subject to the provisions of the HOOPP Amending Agreement.
7On November 20, 2019, Intermarket’s counsel gave notice to Weiss that the Weiss Agreement will be assigned to IPort. On November 21, 2019, Intermarket entered into an Assignment and Assumption Agreement with IPort (the “IPort Agreement”). The IPort Agreement was effective one minute before the closing of the Weiss Agreement. The IPort Agreement provides that all of Intermarket’s rights and interest in the Weiss Agreement are assigned to IPort.
8The net area issue was not resolved before the transaction closed. On November 21, 2019, Intermarket advised Wiess that it does not agree with the purchase price calculation and it was reserving its rights in respect of the dispute. Counsel for Weiss took the position that if IPort closes the purchase, the Weiss Agreement will merge on closing and Intermarket will not have the right to pursue an action against Weiss with respect to the purchase price.
9Intermarket paid the amount due on closing. On November 22, 2019, ownership of the Weiss Property was transferred from Intermarket to IPort. IPort continues to be the registered owner of the Weiss Property.
10On December 19, 2020, Intermarket brought this Application against Weiss seeking the recovery of $2,853,465.46 which is the amount it says it overpaid for the Weiss Property based on the net area calculation. An Amended Application was issued on January 13, 2020. Weiss brings this Motion to dismiss the Amended Application on the basis that the proceeding is frivolous, vexatious or otherwise an abuse of process. In the alternative, Weiss claims that Intermarket does not have the legal capacity to commence or continue the Amended Application.
11For the reasons set out below I dismiss the motion, with costs payable to Intermarket fixed in the amount of $25,000.
THE ISSUES
12The following issues will be addressed in this endorsement:
a) Should the Amended Application be dismissed as frivolous or vexatious or otherwise being an abuse of process?
b) Does Intermarket have the legal capacity to commence or continue the Amended Application?
ANALYSIS
a) Should the Amended Application be dismissed as frivolous or vexatious or otherwise being an abuse of process?
13Weiss argues that it is plain and obvious that the Amended Application cannot succeed because it seeks to assert the rights of another entity, and as a result is frivolous or vexatious. It is also Weiss’ position that to allow Intermarket to seek compensation with respect to property owned by another is, on its face, an abuse of process.
Frivolous or vexatious
14Section 2 of the IPort Agreement provides:
a. Effective as of the Effective Date, the Assignor [Intermarket] hereby assigns and transfers to the Assignee [IPort] all of the Assignor’s right, title and interest; (i) in and to the Purchase Agreement; (ii) in and to the Property; (iii) in the Deposit.
15There is no qualification or limitation set out in the assignment provision of the IPort Agreement. There is no “carve out” pursuant to which Intermarket retained rights under the Weiss Agreement. Weiss argues that as a result of the unqualified assignment, only IPort could bring an action with respect to the Weiss Agreement.
16Weiss states that it was not aware of the HOOPP Agreement or HOOPP Amending Agreement until after this motion was brought. It did not receive notice of an assignment by Intermarket of its rights under the Weiss Agreement to HOOPP. Weiss also did not receive notice of the HOOPP Amending Agreement which purported to carve out of the assignment the right to bring a claim against Weiss with respect to the net area dispute. Weiss argues that it is not a party to either the HOOPP Agreement or the HOOPP Amending Agreement and is not bound by the terms of those agreements.
17Intermarket argues that Weiss is taking an overly technical approach. When a transaction involves a number of related contracts, the intention of the parties cannot be determined by looking at just one agreement but requires a consideration of all related documents: Salah v. Timothy’s Coffees of the World, 2010 ONCA 673, at para. 16. Intermarket argues that when the related documents are considered together, the parties intended Intermarket to have the sole right to make a claim against Weiss with respect to the net area dispute. Intermarket argues that the parties had the right to allocate to Intermarket the right to sue Weiss for breach of contract: Dhami v. Redekop, 2020 BCSC 630, at para. 187.
Abuse of process
18Weiss also argues that the Amended Application cannot succeed because Intermarket’s claim seeks compensation with respect to property owned by another and is therefore an abuse of process and contrary to fair play and decency. Weiss states that as a result of the unqualified assignment of the Weiss Agreement to IPort, only IPort could bring a proceeding with respect to the net area dispute. If Intermarket is permitted to bring this Application, Weiss may be subject to duplicative proceedings.
19Intermarket argues that based on the agreements between it, HOOPP and IPort, Intermarket retained the right to bring a proceeding with respect to the net area dispute. Article 21 of the HOOPP Amending Agreement provides that the right to bring a proceeding pursuant to the Weiss Agreement was not assigned to HOOPP or IPort. Intermarket continued to be the only party with a right to bring a proceeding against Weiss with respect to the net area dispute. I am of the view that there is no risk of duplicative proceedings.
Summary
20I am unable to conclude that it is plain and obvious that the Amended Application cannot succeed. There is no dispute that the Weiss Agreement contemplates a claim with respect to the net area and purchase price calculation. Weiss argues that Intermarket lost the right to pursue that claim when it entered into an unqualified assignment with IPort. Intermarket claims that a review of all agreements provides that HOOPP, IPort and Intermarket agreed between them that Intermarket retained the right to bring the action with respect to the net area dispute. Intermarket’s position is based on the wording of the various agreements.
21I am also unable to conclude that the Amended Application is an abuse of process. The right of action arises out of the Weiss Agreement and is not dependent upon ownership of the property. Intermarket argues that based on a reading of all the agreements, the right to pursue Weiss with respect to the net area dispute was not assigned to HOOPP or IPort. The only party that had the right to sue Weiss was Intermarket and as a result there is no risk of duplicative proceedings.
22Intermarket’s position is based on the various agreements and is not without merit. I am not satisfied that this is the “clearest of cases” where it would be appropriate to summarily dismiss the Amended Application without a full hearing on the merits: Farrell v. The General of the Salvation Army, 2011 ONSC 317, at para. 41.
b) Does Intermarket have the legal capacity to commence or continue the Amended Application?
23In the alternative, Weiss argues that as a result of the unqualified assignment of the Weiss Agreement to IPort, Intermarket does not have the legal capacity to commence or continue the Amended Application. According to Weiss, after closing, only IPort had the legal capacity to bring the action against Weiss.
24Weiss relies on Collins Safety Inc. v. Act Safety Inc., 1998 CarswellOnt 5142. The court found that the plaintiff could not maintain an action based on the promissory note because it had agreed to sell “all accounts receivables, promissory notes and other debts owing by or due or accruing due to the vendor.” The judge found that the plaintiff effectively transferred all of its assets and therefore could not bring an action as the owner of the assets. Intermarket states that the Collins case is distinguishable on its facts. There, the court reviewed the contracts and found that the clear effect was that the plaintiff transferred all of its assets and as a result, lost its status to bring the action. In contrast, Intermarket did not transfer all its rights to HOOPP or IPort but instead retained its contractual right of action against Weiss. Intermarket argues that it retained its right of action and has the legal capacity to commence and maintain the proceeding.
25Intermarket also argues that R. 21.01(3)(b) of the Rules of Civil Procedure provides for a summary dismissal of a claim which is brought by an entity which does not have the legal capacity to sue or be sued. Here, there is no issue with respect to Intermarket’s corporate status. It is a legally existing entity which has the capacity to bring an action.
26I am satisfied that Intermarket is a viable legal entity and has the legal capacity to commence and continue the Amended Application. It is not plain and obvious that the claim should be struck.
DISPOSITION
27The motion is dismissed. Weiss failed to establish that the Amended Application is frivolous, vexatious or otherwise an abuse of process. Weiss failed to establish that Intermarket does not have the legal capacity to commence and continue the Amended Application.
28Weiss argued that the proceeding is an abuse of process because it may face a duplicative proceeding brought by HOOPP or IPort. I am satisfied that based on the various agreements, Intermarket did not assign the right to bring a claim pursuant to the Weiss Agreement with respect to the net area dispute. Intermarket is the only party that has the contractual right to bring the claim against Weiss and as a result, I find there is no risk of duplicative proceedings.
29Intermarket was successful on the motion and is entitled to its costs. In exercising my discretion, I considered the factors identified in Rule 57.01 of the Rules of Civil Procedure. I also considered the overall objective of any costs award; that it be fair and within the reasonable expectation of the unsuccessful party to pay: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at paras. 26, 38.
30The parties filed Bills of Costs at the conclusion of the argument. Weiss claims that if successful on the motion it would seek costs of $33,056.64 on a partial indemnity basis. Intermarket claims a similar amount. Intermarket claims that if successful it would seek costs in the amount of $36,453.24 on a partial indemnity basis.
31I award partial indemnity costs of the motion to Intermarket, fixed in the amount of $25,000, inclusive of counsel fee, disbursements and HST. The costs are payable within 30 days of the date of this endorsement.
Chalmers, J.
DATE: September 25, 2020